A newly released report by FSS (Financial Software and Systems) and Omdia showcases the potential for prepaid growth as it continues to attract investment from banks.
The report also pointed toward the impact from the pandemic, and greater investments in payments solutions that streamline the development of digital payment solutions.
“COVID-19 will also act as a driver for technology investment, particularly for digital transformation. The pandemic is accelerating the move toward digital, driving laggard customers to use digital channels, and is also bringing about an increase in the use of electronic payments rather than cash,” the report notes, later detailing that: “Banks are becoming increasingly alive to the need for digitalization of the wider processes that surround payments.”
The report, “The Future of Retail Payments: Identifying the opportunities,” specifically points to areas of growth in the prepaid space that is getting increased attention from the financial services ecosystem. Included in the report are the following key points:
- 78% of banks stated that they are currently investing or were planning to invest in the prepaid space
- Of those banks investing in prepaid, general purpose offerings were ranked as the number one investment areas by 32% of banks, followed by forex cards (20%), and payroll cards (17%)
- Payroll cards are an increasingly important segment in prepaid, particularly for the unbanked. As the report notes: “Payroll cards have steadily grown in popularity in the US, offering employers an electronic way to pay unbanked and underbanked employees”
- The push to pay workers electronically has been one reason for an uptick in payroll card demand. This is particularly true in some Middle Eastern countries, where legislation has also been a key driver of a push toward electronic payroll solutions.
- Increasingly, investing in prepaid to offer payroll cards is cited by banks across the world as being a key motivator.
Download the full report below: